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Informal Economies and Power: An in-Depth Exploration of the Shadow Economies in Global Political Economy

Jason Hayes

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Published in Informal Economies And Power (RIPE In Global Political Economy)

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The informal economy refers to economic activities that are not regulated or taxed by the government. It is a vast and complex phenomenon that has a significant impact on the global political economy. Informal economies can be found in both developed and developing countries, and they take many different forms, from street vendors to small-scale businesses to organized crime networks.

The informal economy is often seen as a negative force, a source of poverty and inequality. However, it can also be a source of opportunity and innovation, providing jobs and livelihoods for people who are excluded from the formal economy. In this article, we will explore the complex relationship between informal economies and power in the global political economy.

Informal Economies and Power (RIPE in Global Political Economy)

Informal Economies and Power (RIPE Series in Global Political Economy)

by Jennifer Stevenson

4.1 out of 5

Language	:	English
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The Extent and Impact of Informal Economies

The size and scope of the informal economy is difficult to measure, as it is by nature unrecorded. However, some estimates suggest that it accounts for up to 50% of global GDP. In developing countries, the informal economy is often larger than the formal economy. For example, in India, the informal economy is estimated to account for 40-50% of GDP, while in Nigeria it is estimated to account for 60-70% of GDP.

The informal economy has a significant impact on the global political economy. It can contribute to poverty and inequality, as informal workers often lack access to social protection and other benefits. It can also lead to environmental degradation, as informal businesses often operate outside of environmental regulations. However, the informal economy can also be a source of opportunity and innovation, providing jobs and livelihoods for people who are excluded from the formal economy. It can also contribute to economic growth and development.

The Power Dynamics of Informal Economies

The informal economy is often characterized by power imbalances. Informal workers are often at the mercy of employers, who may pay low wages and provide poor working conditions. Informal businesses may also be vulnerable to extortion and violence from organized crime groups. In some cases, the informal economy can even be used as a tool of political control, as governments may use it to coopt potential opponents or to provide patronage to their supporters.

The power dynamics of the informal economy are complex and vary from context to context. However, there are some general patterns that can be observed. First, the informal economy is often shaped by the power relations between different groups in society. For example, in many developing countries, the informal economy is dominated by poor and marginalized groups, who are often excluded from the formal economy due to discrimination or lack of opportunity. Second, the informal economy is often shaped by the state. Governments can play a role in regulating the informal economy, providing support to informal businesses, or even using the informal economy to further their own political goals.

Policy Implications

The informal economy is a complex and challenging issue for policymakers. On the one hand, the informal economy can be a source of poverty and inequality. On the other hand, it can also be a source of opportunity and innovation. The challenge for policymakers is to find ways to harness the positive aspects of the informal economy while mitigating the negative aspects.

There are a number of policy approaches that can be used to address the informal economy. One approach is to focus on formalizing the informal economy. This can be done through a variety of means, such as providing access to credit and training for informal businesses, or simplifying the process of registering a business. Another approach is to focus on improving the working conditions of informal workers. This can be done through a variety of means, such as increasing the minimum wage, providing access to social protection, and improving occupational health and safety standards.

There is no one-size-fits-all approach to addressing the informal economy. The best approach will vary depending on the specific context. However, it is important to remember that the informal economy is a complex phenomenon that has both positive and negative aspects. Policymakers should take a balanced approach that seeks to harness the positive aspects of the informal economy while mitigating the negative aspects.

The informal economy is a major force in the global political economy. It has a significant impact on poverty, inequality, economic growth, and development. The power dynamics of the informal economy are complex and vary from context to context. Policymakers should take a balanced approach to addressing the informal economy that seeks to harness the positive aspects of the informal economy while mitigating the negative aspects.

Informal Economies and Power (RIPE Series in Global Political Economy)

by Jennifer Stevenson

4.1 out of 5